1. QM222 Your regressions and the test
QM222 Fall 2017 Section A1

2. Test
6 pm SAR 104
2 hours
Bring a simple calculator and a sheet of paper
Office hours:
Today 11-3:30
Tomorrow 3:30-5:30
Class Wednesday? No – In-class project help?
QM222 Fall 2017 Section A1

3. 1 sheet of paper
This sheet should have 2 regressions from your project:
A simple regression with 1 explanatory variable (your key one)
A multiple regression with 2 explanatory variables (your key one, and a second variable that is a confounding factor)
Ideally, when you add this second variable, the coefficient on your key variable will change.
If you don’t have regressions of your own, I will supply some.
These regressions need to use exactly the same number of observations.
QM222 Fall 2017 Section A1

4. How to get the same number of observations in both regressions
Run the multiple regression
Run the simple regression adding an if statement:
regress myyvariable myxvariable if e(sample)==1
e(sample) is a dummy variable Stata makes =1 for observations included in the previous estimation.
QM222 Fall 2017 Section A1

5. How to print out your regressions in word: make them courier new 9 font remove space after paragraphs
. regress GDP beforeafter
Source | SS df MS Number of obs =
F(1, 57) =
Model | e e+11 Prob > F =
Residual | e e+10 R-squared =
Adj R-squared =
Total | e e+10 Root MSE = e+05
GDP | Coef. Std. Err t P>|t| [95% Conf. Interval]
beforeafter |
_cons |
QM222 Fall 2017 Section A1

6. Moer on this piece of paper
It can include anything else you want on the other side (i.e. can be a “cheat sheet”
QM222 Fall 2017 Section A1

7. Be able to do something like this with your 2 regressions (graph or algebra or logic)
The combined effect c1 includes both X­1‘s direct effect b1.
And the indirect effect (blue arrow) working through X­2.
i.e. when X­1 changes, X2 also tends to change (a1)
This change in X­2 has another effect on Y (b2)
The indirect effect (blue arrow) is the omitted variable bias and its sign is the sign of a1 times the sign of b2
QM222 Fall 2017 Section A1